Nexpoint Residential Trust, Inc. · NYSE:NXRT
Nexpoint Residential Trust — Investor Presentation (March 2015)
28 slides from Nexpoint Residential Trust's investor presentation, Mar 19, 2015
Slide 1: NexPoint Residential Trust Investor Presentation March 2015
Exhibit 99.1 NEXPOINT Investor an affiliate Presentation ofRESIDENTIAL March 2015 TRUST
Slide 2: Cautionary Statements Regarding Forward-Looking Statements
CAUTIONARY Forward-Looking future Accordingly, forward-looking law. similar Non-GAAP different accordance is AFFO interest, required measures NOI Additional This qualified stockholders 1ancalculated affiliate Past are may presentation or will performance depreciation relevant GAAP than forward-looki
Slide 3: Executive Summary
EXECUTIVE Targeted LISTING Pro PORTFOLIO real markets The NexPoint OVERVIEW portfolio Investment Shareholders MECHANICS SPIN-OFF INVESTMENT NHF NXRT -ascribed More COMPANY MANAGEMENT Management buyer Investor-friendly 2an Attract Narrow Provide affiliate Forma estate portfolio assets than continues
Slide 4: Listing Overview
LISTING NexPoint ENTITY EXCHANGE: NYSE: RECORD March TARGETED $15.00 21.3 (DISTRIBUTION $978 (IMPLIED ($877 $622 $319 NET $332 IMPLIED (Based 6.6% PRO FFO 64% $23.8 EXPECTED $0.83/sh; $1.00/NHF LEGAL Jones STRATEGIC *Ladenburg anInclusive affiliate Million ESTIMATES ASSET FORMA Million Day; Million
Slide 5: Background and History
•BACKGROUND 2006 FIRST NHF A Million NHFHistory ACQUISITION NexPoint 4Q LAUNCH Strategies ••ticker As NXRT unitsof3Q NHF Invest in to 4Q invests ten of NHF’s Value Credit NXRT December isin under credit, REITs NAV. APARTMENT Spin-Off 700M listedinNHF Creation: NXRT’s PREDECESSOR IN onhigh- 31, 1Q AS
Slide 6: Experienced Management Team
*5Oversees EXPERIENCED Senior Ownership James Co-founder Brian developing Matt estate Scott Serves Experience: sq. Industry ft. Board NXRT, Edward KPMG, McGraner—Chief Property BH Harry Ellington—General Mitts—Chief of and Dondero—President Management asBeneficial real Experience: Chief advised Comp
Slide 7: Structure of the Spin-Off
•STRUCTURE Structure Sponsor Advisory NexPoint A of investment NHFNew theyears growing andBreed will Credit Post-spin-off company. ofopportunity Formation spin-off External Strategies NHF its Advisers: in(NHF) ofapartment will Fund NXRT theassets continue tovalue-add NexPoint into operate apartment
Slide 8: Investment Thesis: Narrow NAV Discount and Attractive Pricing
•INNOVATIVE INVESTMENT NARROW NHF By has DISCOUNT On spinning historically average, High-quality THESIS apartment apartment off NXRT AND traded APARTMENT REITs atNHF, REITs from aoften discount have to REITNAV historically wetrade above believe PRICING traded NAV near NAVNXRT ••••~$0.28/sh Narrowing
Slide 9: Narrow Discount: Value Creation
INVESTMENT Closing $11.95 40% NHF Avg: 20% 09 -20% 0% Embedded Potential $332 Implied $292 8an affiliate 09—10 Spread 11% NAV $10 Value the Value 10—11—11 and NHF vs. NXRT of $9 Gap: (%): Value NHF $8 NHF Creation: THESIS: Price NHF $7 Net Share if $6 Share Asset $13.40 Trades has 12—12 $5$40 NARROW
Slide 10: Apartment Pricing: Sector NAV Premiums
•9an INVESTMENT More estate Historical Source: Discount Green Street Advisors Jun-08 Jun-09 Jun-10 Dec- 3Jun-1206 08 09 11 — than holdings. Sector Dec- Public NAV: THESIS: Apartment Premiums Jun-07 Historical -7% — Premium 60% affiliateApartment of— 12 . Dec- 50% Market Dec- While Jun-13 10 40% 07 A
Slide 11: Public Apartment REIT Scorecard
INVESTMENT Public Hybrid Low-Barrier NXRT Initial NOI Risk Management Return ++ Track Insiders Insider Takeover Attractiveness Capital Having Balance Source: an 10 affiliate —Potential ofRecord Yield — REIT MAA Track Ownership Allocation High-Barrier Structure: New access Public should Sheet •—•—++
Slide 12: Innovative Strategy: Value-Add Investment Matrix
•11 INVESTMENT Return Value Differentiated NXRT Investment Apt 10 Core REITs Plus Core Opport-Higher 052.5 51% NXRT $1 Total Source: *Major an %affiliate $10 44% Market is Add $100 will Other sectors Public theofonly Capprovide THESIS: Strategy Lower REIT Strategy: Major 7.5 unistic include ($ optio
Slide 13: Innovative Strategy: Rehab Process
INVESTMENT Value average Cumulative Range Unit Per % Acquire -10% Mark Cost Change NOI *Median: an 12Includes 0% affiliate 30% 50% Range 40% Savings) to Creation Est (Best) in unit Market Integrate 10% Representative 51% .-2% all ofImpact still Range units Median: Historical Timber Process: tolTHESI
Slide 14: Innovative Strategy: Track Record
*an$616 •INVESTMENT their Rehab Values Timber .Current $0 $- Value Cost History $10,000 cost Basis Created Est Process above Values NAV $30,000 Includes of basis. affiliate$20,000 $20,000 Success: of Cost Total below Rehab NXRT’s THESIS: assets Basis Courtney Investment $30,000 Improving Value Value
Slide 15: Innovative Strategy: Case Study
••Key INVESTMENT The investment Unlike Rehab Average tomost of THESIS: Rehab roughly case (Case INNOVATIVE 25%. studies Study): that pick NXRT’s STRATEGY(CASE predecessor theDisruption exceptions, the has STUDY) rehabbed Courtney Cove more thanrepresents property 400 units aattypical an average NXRT
Slide 16: Innovative Strategy: Non-Existent Supply
INVESTMENT Non-Existent NXRT markets. Class 40% 2000 1.3 Supply -10% -0.1 Source: an 15 affiliate Million A30% AB/C Awill B/C 10% and REISof be Class 2001 B/C Cumulative Supply: insulated THESIS: Apartment A 2003 Since Apartment 2005 from 0% units INNOVATIVE Cumulative 2007 thewere developers new 20
Slide 17: Unique Strategy: Rehab Not Development
INVESTMENT Rehab Not (Illustrative Class Stabilized $6,875 It accretive an 16 isaffiliate only not A BPencils, Required and economically inwill toCap Class ofrehab Purposes BNXRT Apartment Rate Development THESIS: AMonthly Class in6.0% be NXRT Only) feasible insulated BDevelopment UNIQUE 5.0% Rent h
Slide 18: Higher Dividend Yield and Coverage
INVESTMENT Higher meaningful expected If Dividend 10% 9% 8.3% 8% 5.5% 5% 4% 3.7% 3.1% 2.9% 3% 1% Inc *MAA an 172014 all affiliate .100% If170% spin-off 130% 3.6% 2.2% shares 160% 4.6% 3.1% 2.8% all Trust Yields, Pro-forma NHF $0.83/sh 3.4% 110% Yield Covered Dividend of Low-Barrier 4.0% 120% dividen
Slide 19: Portfolio Summary
PORTFOLIO Key Units: (Cost Value/ Average 30 Rehab Unit: Completed Yield Capital: 26.9% 7,334 (Fully Portfolio DC Charlotte Atlanta Jacksonville Assets 54321Exposure an 18Atlanta Dallas Nashville Jacksonville Orlando affiliate years Metro Portfolio on basis): be funded): 11,816 Unit Process Houston
Slide 20: Geographic Exposure vs. Public REIT Peers
PORTFOLIO Geographic vs. A long-term Top NXRT 9.9% 5.3% 2% District 9.4% 6.7% Nashville 6.1% 7.7% Atlanta Source: Jacksonville Dallas an 19Different affiliate own 32% 5 22% Orlando 5% 8.3% 9% Nashville Markets REIT of Public propositions Petersburg Dallas 5.9% District growth 5.7% of Columbia Approa
Slide 21: Internal Growth: NOI Growth
INTERNAL A through NXRT ($000s) $60.0 $70.0 14.8% .$51 $0.0 $10.0 2.5% $20.0 5.1% $30.0 $40.0 9.0% $50.0 ‘14 NOI Growth *-Forma an 20 *Cash For League affiliate . .$0.9 Year Lowest assets $6.1 Annualized Market ‘15 ‘15 the $0.5 NOI ofNOI $58.0 of rehab NOI not its GROWTH Apt $51.9 Value Own: owned B
Slide 22: External Growth: Acquisitions and Rising Values
PORTFOLIO that Change 140 Acquisitions 130 ‘07 More 90 40 06 10- *Based an 21 affiliate Millions) $0 06Value in has NXRT 13.8% than 07 Apt on in been 07$250 Values Timing aacquisitions 100 of $300 Acquisition 07 Rising 8.0% created GROWTH just 08 creation: Peak) vs. of 08 (Indexed aTide: to NXRT Inv
Slide 23: External Growth: Repeatable Value Creation Process
EXTERNAL growth Top Identify Determine Ascertain Capital Distribute Repeatable Value-Add Integrate Mark-to-market Invest Source Underwriting through underwrite Stress Due assumptions Conduct inspection Complete Validate Negotiate Fund an affiliate Down/ Diligence and test deferred potential demonstr
Slide 24: Peer Comparison: Size
PEER Small magnifies U.S. Assets $120 NXRT Debt $80 69% $40 21 $20 $.10 Source: HME an 23 3.42 4$.9affiliate 2962 713 36% .NXRT’s 4REITs $60 Equity Capitalization .31 $by COMPARISON: Apartment Equity $Public pipeline, 10 $0 31% 1 Design: the of Total .Debt EQR small 3results 64% REIT Asset NXRT AVB
Slide 25: Peer Comparison: Implied Cap Rate
PEER High with Implied Low-Barrier Yield 7.5% 7.1% Current 7.0% 6.5% Rate 6.6% 6.0% 6.2% 5.8% Sector 4.6% 5.0% 5.1% 5.5% NXRT 4.0% 4.1% 4.5% Source: an 24 affiliate the Yield Post-Rehab 6.4% 5.9% 4.6% on COMPARISON: Avg.: Associated Sector Cap Public Nominal higher Cost: of and 6.4% 5.9% on 5.5% Hig
Slide 26: Peer Comparison: Rent per Unit
PEER Quality deferred Monthly Low-Barrier $2,272 $1,900 $2,100 $1,700 Sector $1,100 Associated Residential Source: an 25 affiliate COMPARISON: Avg.: Avg. $2,300 $1,787 $1,631 Migration: Public maintenance Rent/Unit of Camden Property Rent $1,574 High-Barrier $2,233 $1,622 REIT ofNXRT Comparison $1,5
Slide 27: Management Guidance and Implied Valuation
Management GUIDANCE NAV Implied Balance Total Shares *Pro ** Earnings ‘15 (FFO/ FFO 25.0x 20.3x 17.6x 14.8x 6.4% 6.6% .0x 5.1% 4.6% 5.0x 0.0x ESS High Source: an 26Adjusts affiliate Inclusive 23.4x 19.6x 7. 5.8% NOI* Same-Unit FFO forma AVB 4.1% 3. Multiple Barrier Guidance Liabilities**: 6.2% 5. 4.
Slide 28: Reconciliation of Non-GAAP Financial Measures
RECONCILIATION Pro 12 Advisory Reconciliation The anticipated administrative an 27 affiliate Months Forma following Company Administrative NXRT of Ended to be is anticipates fees of$45.0 aGuidance 2014 (‘000s) reconciliation and OFmillion NOI the NON-GAAP Fee that 12/31/2014 reimbursement for $894 n
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